Why am I wrong about this ?
silvereagle
Posts: 290 ✭
Today everyone is negative on the dollar and gung ho on PM. Makes sense considering that BS Billion Dollar bailout. However does anyone really think that this worst case scenario meltdown of the dollar will really play out. You know whats going to happen ? Every thing will calm down and when it does people are going to realize that stocks are a GREAT deal after losing 3000 to 5000 points and the housing market is a GREAT deal again after it has fallen 30% or so. And when that happens people are going to flee PM in masses to any investment that can yield a 7 to 8 percent annual return. These things have real value. A home has real value because you can live in it. It provides shelter. Stocks provide shelter because most of the time business is making bank and thus your making a profit owning a portion. Where is the value or usefulness in Gold, or silver ? They are simply status symbols and areas to hold your money in times of uncertainty like today. However, when the markets are functioning properly, which is the case 99% of the time PM's fall in value or are stagnant. There is no long term period where PM return a consistent 7 to 8 percent. They fell or remained stagnant from 1982 through around 2003 or so. Twenty plus years of stagnation can not be erased by a few years of growth fueled by fear. Fear subsidzes, it always does and when it does you are going to see PM fall like a brick just like they did 25 years ago. JMO.
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This economy and the dollar are going to be rocked hard, to levels that few realize.
The stopgaps are just that.
We haven't scratched the surface of the financial mess. The bailouts will have to end and that spells pain.
Precious metals will only go up from here, IMO.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
Oil isn't going up and down because it's more and less valuable, it's because the value of the dollar is increasing and decreasing. Gold is in the same boat as oil.
We haven't even had the commercial real estate bubble burst yet.
Yes, it will be worse than 99% of the country thinks. That's the insidious nature of downward trending markets. The amount of bailout money will end up in the tens of TRILLIONs at a minimum. It could easily be a hundred TRILLION.
Every thing will calm down and when it does people are going to realize that stocks are a GREAT deal after losing 3000 to 5000 points and the housing market is a GREAT deal again after it has fallen 30% or so.
People may jump over to stocks at 7000-9000 DOW but it doesn't mean it's a once in a lifetime buying opportunity. Housing wasn't a great buy during the great depression until it hit 10% of former value.
And when that happens people are going to flee PM in masses to any investment that can yield a 7 to 8 percent annual return.
The average person in the US won't have any gold. We just don't value it the same way Asians do. Why flee PM's when they are returning 15-25% per year over the past 7 years? It will be one of the best performing assets from 2000-2015. Stocks will show up nowhere on such a list.
Gold has real value. Has had it for 5000 years. The fiat dollar has been around for 37years. I'll take my chances with the barbarous old man.
A home does has real value. The shelter portion is worth about 50% of the current price. The rest is speculation.
Where is the value or usefulness in Gold, or silver?
If you don't get it yet, you never will. We are not concerned about what gold did when the price against it was rigged or kept constant. But the 1971-1980 and 1999-present markets do reveal the meaning. The stock markets are rigged 99% of the time and have been since the 1980's. The functionality is fading fast. 25 years of bogus monetary and credit inflation do not a sound stock market make. It will take 15-20 yrs to wash out all that rot and stench. The stock market will fall like a brick, just like it did in the 1970's and 1930's. From there the best we will see is a basically sideways movement for years like in the 1970's.
roadrunner
<< <i>We're nowhere near the boiling point.
This economy and the dollar are going to be rocked hard, to levels that few realize.
The stopgaps are just that.
We haven't scratched the surface of the financial mess. The bailouts will have to end and that spells pain.
Precious metals will only go up from here, IMO. >>
I think that was the boiling point. In other words the moment that screws things up. The rest is just a fallout or residual affect and the fallout is worse. I guess that's what I mean .
All I know is I have scoffed at you gold bugs for some time. I think I may be joining you guys. This last thing did it for me. I did alot of reading and alot of pondering about this through the weekend. Our govt' has done everything in their power to screw up the dollar. I'm about done with stocks until I see some stability and buying some gold. I could cash out my 457(I dont need it. Justa supplemental to a pension), but don't want the penalty and taxes. May just move it to money funds and contribute less to it while taking that extra and buying gold.
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Why would our own government want to destroy us as a Nation? Were the prices of everything to high or not high enough! What do times like this hurt other than its people? I want to know why it has been done! It is a crime against our nation, Known as Treason. Who could do it and get away with it knowing they could not be touched by any laws, not to many can be void of the law!!!! Russsia is moving ships off the coast of Venezeula...very reminicent of the Bay of Pigs and the Cuban Missle Crises...with another crazy man!!! There is more than meets the eye here, that I hope will never repeat itself!
<< <i>All of this has been done by the Government! You know it by the Regulators turning a blind eye to everything!!!
Why would our own government want to destroy us as a Nation? Were the prices of everything to high or not high enough! What do times like this hurt other than its people? I want to know why it has been done! It is a crime against our nation, Known as Treason. Who could do it and get away with it knowing they could not be touched by any laws, not to many can be void of the law!!!! Russsia is moving ships off the coast of Venezeula...very reminicent of the Bay of Pigs and the Cuban Missle Crises...with another crazy man!!! There is more than meets the eye here, that I hope will never repeat itself!
Another scary sign is us having a second base in the middle east and Russia moving into Georgia building a path down to the middle east to their ally Iran.
Yes, stocks could triple and houses could double from these levels.
And the price of a fast-food hamburger may be $20.
I don't see how the dollar can recover from today's conditions. A hundred years ago we had a gold-backed dollar. Now we are headed for a $ubprime-mortgage-backed dollar. I don't see any way that the budget can be balanced.
I would expect that eventually there will be fundamental currency reform with some kind of stable backing. Until then, I would rather own gold-backed assets than the dollar in its current state.
My Adolph A. Weinman signature
<< <i>Another scary sign is us having a second base in the middle east and Russia moving into Georgia building a path down to the middle east to their ally Iran. >>
I don't know that it's scary, in many ways it's comforting.
All those who have been screaming for US to get out of Iraq don't really understand the bigger picture.
Those monster 500 mil. $$ bases that have been built there were paid for by the Saudis for our troops and hardware to occupy.
We aren't leaving Iraq in terms of a military presence there in our lifetimes. Get used to it.
The Saudis walked out of OPEC recently and for their own selfish reasons, to sell to us and have us there as their bodyguard, plus we need to be there or Russia would certainly advance on the area. It's common knowledge that no military is a match for the US, the Russian Army would be slaughtered and they'd never see their killers. China knows this as well.
Don't feel like typing out a short book here, but it doesn't really take too long to connect the dots.
Regarding bailouts, how many know that AIG held the teacher's reitrement pensions for many, many states? California, Washington, Arizona, New York, Maryland, Florida and many more come to mind here. No way were they going to let the teacher's pensions vanish. That would not have been acceptable to the American public. Lehmann should have held more valued assets. Not valuable, but valued by the American taxpayer.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
I think the critical thing is that there is no path back to recovery. Economic recovery begins with employment and productivity. We've shipped all production and much development capability overseas. There is little industry left to really fuel any kind of recovery.
<< <i>Military power is no longer necessary. >>
Don't fool yourself.
Even if you don't have money, the biggest gun in the room can call the shots(no pun intended).
It's the reason that the Saudis will sell all of their production to us if it comes to that. Even at a better price than OPEC if need be.
John Marnard Keynes, The Economic Consequences of the Peace, 1920, page 235ff
<< <i>
<< <i>We're nowhere near the boiling point.
This economy and the dollar are going to be rocked hard, to levels that few realize.
The stopgaps are just that.
We haven't scratched the surface of the financial mess. The bailouts will have to end and that spells pain.
Precious metals will only go up from here, IMO. >>
I think that was the boiling point. In other words the moment that screws things up. The rest is just a fallout or residual affect and the fallout is worse. I guess that's what I mean .
All I know is I have scoffed at you gold bugs for some time. I think I may be joining you guys. This last thing did it for me. I did alot of reading and alot of pondering about this through the weekend. Our govt' has done everything in their power to screw up the dollar. I'm about done with stocks until I see some stability and buying some gold. I could cash out my 457(I dont need it. Justa supplemental to a pension), but don't want the penalty and taxes. May just move it to money funds and contribute less to it while taking that extra and buying gold. >>
As much as I am pro-Gold, I don't know if I would cash out all my stocks.
I think a perfect scenario would be a 1/3 split of ones' portfolio into the three groups of: PM's; Cash; good valued stocks. This way, you're pretty much covered for most scenarios.
Cash in my case is Canadian dollars.
For US residents, I would have the 1/3 group of Cash all in Foreign currencies (Canadian dollar, Asian currencies; Swiss francs etc..)
"“Those who sacrifice liberty for security/safety deserve neither.“(Benjamin Franklin)
"I only golf on days that end in 'Y'" (DE59)
Great Myths of the Great Depression
Compare it to today.
I'm not pro-gold, but I cashed out my stocks, paid the penalty, paid the taxes on the increased income and I am buying *physical* silver and gold incrementally. I've been doing that over the past 24 months with all of my retirement money. That doesn't necessarily make me pro-gold, but it does make me no better than neutral on paper assets - I see no compelling reasons to be in paper at this time, and there are quite possibly some good reasons to get out, so I did.
This could be Chrysler in 1982, and it could be a great time to get in, or it could be something else. I believe that it is something else.
When I say that I'm not pro-gold, what I do mean is that I'm sick and tired of having the government skim value off of my savings, whether it be stocks, cash or bonds - by continually spending money on crap that I vehemently disagree with, and by funding the crap with imaginary money that I pay for.
By taking a gold position, I am standing against wasteful government spending and a corrupt fiat monetary system, "stepping aside" with my assets - sending my own message. I might lose. I might come out ahead. The government might declare my precious metals to be contraband. Who the heck knows?
Every new boneheaded move by the government or new market development that illustrates that the dollar is being destroyed - pushes me toward buying another chunk of precious metals. I'm not even anticipating the events - I only buy pms reactively, after the fact (such as a bailout that I do not agree with). They keep doing what they do, and I keep doing what I do. I don't consider it a gung-ho precious metals position, I consider my moves to be rational and deliberate.
When I see that all, or most of the problems have been fixed or repaired in a legitimate way, then my confidence in the markets and in government will *begin* to be restored, and I will *start* to reinvest accordingly. At this point, I see no reasons to be in paper.
Tit for tat. It's been working for me. And I'm voting with my money.
I knew it would happen.